Gail MarksJarvis: Borrowers Must Fight For Themselves As Student Loan Reforms Are Rolled Back

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WWR Article Summary (tl;dr)Some consumer advocates are worried that the Trump administration will leave student loan borrowers without the help needed to avoid defaults. The new administration is rolling back Obama-era reforms that would have made it easier on borrowers.

Chicago Tribune

Message to people wondering how they are ever going to handle all their student loans: Be tough. Pay up. Don’t expect the federal government to play Mr. Nice Guy.

In a surprising twist after a presidential election in which young adults pleaded for relief from $1.3 trillion in student loans, the Trump administration doesn’t look like it’s going to coddle federal student loan borrowers. In fact, it’s rolling back Obama-era reforms that would have made it easier on borrowers.

The U.S. Department of Education under Obama had discovered through numerous studies that people with student loans were getting awful service, even incorrect information, when they called student loan call centers to find out what to do with their loans. Reforms, which were outlined but not yet implemented, were supposed to fix the problems.

Among the problems: Student loan call centers not answering phone calls from borrowers at convenient times, not telling borrowers how to make payments they could afford, and not warning borrowers about extra fees.

Instead of providing customer service, the staff taking borrower calls often simply shoved them through the system, according to the studies. Borrowers reportedly were pushed into skipping payments instead of being told how to handle their obligations.

In frustration, many borrowers have been giving up and walking away from their student loans without paying anything. Studies claim this is a significant driver of defaults, and a burden for taxpayers.

About $137.4 billion in federal loans are now in default.

Yet, with a new administration in charge of student loans, the reforms aimed at curing those ills were aborted in a memo this past week from Secretary of Education Betsy DeVos. What she plans to do instead of the reforms isn’t clear. The department didn’t respond to my request for more information. But consumer advocates are worried that she will allow old practices to continue and leave student loan borrowers without the help needed to avoid defaults.